Is digital marketplace model Africa’s employment future?

Africa-based investors and entrepreneurs are increasingly being attracted towards marketplace and on-demand models as opposed to more traditional jobs boards, as freelancing and the gig economy become more common on the continent.

The success of global on-demand businesses like Airbnb and Uber accounts for much of this interest, says Malan Joubert, co-founder of South Africa-based tech jobs marketplace OfferZen.

“Investors tend to be very interested in marketplace businesses, that link different parties and make it easier for them to connect – companies like AirBnB and Uber are popular examples of these,” he said.

However, it is not a case of simply building one of these marketplaces and being successful. Joubert said starting a marketplace was “extremely hard” because entrepreneurs almost always run into the “chicken-egg problem”.

“Why should people list jobs on your site if you have no job seekers? Why should job seekers go to your site if you have no jobs? The plus side of those early challenges is that once they’re established marketplaces have “moats” which make it very hard for competitors to crush you,” he said.

Verticalised services

Much of the innovation in the recruitment space right now is happening with verticalised startups, like OfferZen, who focus on just a thin slice of the overall job market. Another such startup is Nigeria’s Wesabi, which offers its customers access to blue collar workers on a one-off project basis.

Co-founder Sanni Ifedolapo said the startup was feeling the benefits of focusing on a space that had hitherto been ignored.

“The blue collar sector has always been looked down upon by most unemployed youths, though there is an overwhelming amount of pressure in the white collar space. What the blue collar space lacks in Africa right now is organisation and the trust factor,” he said.

By providing vetted, reviewed artisans via its online platform, Wesabi is looking to introduce both of these things, and most working in the blue collar sector more attractive in doing so. Ifedolapo said 70 per cent of its customers are returning ones, while users grow by 10 per cent each month.

“Most of our customer acquisition has been through word of mouth and referrals. I think this is a sign that more people are now getting comfortable with using on-demand services,” he said.

Evolution or revolution?

But is the gig economy a new thing to Africa? Not according to Vije Vijendranath, co-founder of South African photographer marketplace Tapsnapp. He says informal businesses have been doing these things for a long time.

“It’s just not officially called the “gig economy” here. What we are slowly getting into is the digitisation of the gig economy where businesses are listing online, and most importantly allowing for payments digitally. Therefore the transition to digital payments to support the African gig economy has been accelerating very fast in the last five years,” Vijendranath said.

However, according to Bernard Nyagaka, co-founder of Kenya-based creatives marketplace Onesha, more and more people are turning to freelancing via the internet in response to rising unemployment.

“People are investing heavily in skills development in order to get side gigs on the internet. With time, these gigs will turn out to be full-time jobs for most of these young people,” he said.

“While we have a long way to go, data indicates that Africa is slowly adopting this new way of earning income. Initially, most of us thought these things were scams, but people are now embracing the trend, which is very encouraging.”

Convenience creates opportunities

Whether or not the switch towards marketplace and on-demand models represents a seismic shift in how Africans go about their work, there is now demanding that these new platforms – increasing in number every day – are making life easier for both customers and job seekers.

“It has been quite an eye-opener because hiring people has become easier and more accessible to consumers everywhere. Marketplaces are now allowing for consumers to have a trusted medium to help them choose and pay for such artisans, thus allowing for job seekers to get more work and thus earn more,” Vijendranath said.

“Digitising the connection between job seekers and employers has democratised our ability to find recommended workers. This has made it easier to find and hire them. Therefore the job seekers are getting more opportunities to be seen and increasing their job prospects as well. Increased visibility in many cases has also increased the earning potential of the workers, thus improving their lives in the process.”

Nyagaka agrees, celebrating the ability of these models to allow a young designer sitting in Mombasa to work with a company based in San Francisco, or a tutor based in South Africa to give online lessons to students in Lagos.

“For Africa to overcome the challenge of unemployment, we need to embrace change and take advantage of it to maximise its potential. Technology has always been about efficiency: whenever we have efficiency in an ecosystem, cost of production and the productivity of its subjects increases dramatically,” he said.

“If these marketplaces can make young people in Africa more productive, they will be able to earn an extra dollar to support their families, hence helping reduce unemployment in Africa.”

About Author

Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.